Ideal Market Environment for Clarus Corp

Current Price on 03/13/09 $4.00

Current market conditions have enhanced Clarus Corp’s assets for a future combination. Clarus Corp (CLRS.PK) is a shell company with no current operating business but instead has about 86 million in cash or $4.95 per share and 223 million in NOLs. 90% of the NOLs expire 2020 or latter. The current stock price is only $4.06!

CLRS.PK is seeking to acquire a business in any industry and is being managed by the highly successful CEO Warren Kanders. Kanders has a successful track record most notably with AH (NYSE) Armor Holdings. Armor Holdings (AH) posted a ~30% compounded growth rate after he took over.

The first conference call for CLRS.PK was this past Tuesday 03/03/09.He believed given current market conditions it was important to update shareholders on the company’s status and future activities. The next conference call will only be after a new company is acquired.

Competitions for new deals have been dramatically reduced and valuations have fallen substantially. These conditions are improving opportunities for their projected 2009 asset redeployment. Clarus offers a unique opportunity. The ability to provide fresh capital with 86 million in net cash, 225 million in NOLs, immediate access to a public listing, a quick combination with no shareholder vote, and a proven talented manager with Warren Kanders.

There are many companies that would benefit from a Clarus combination. Some examples would be companies with short term liquidity issues, forced divestiture of corporate assets to generate needed liquidity, public companies selling off non core operating divisions, private entities and other situations. All of these actionable opportunities are increasing.

Clarus has stated a clear vision for the new combination and would include 25 million in EBITDA, long term favorable macro trends, an industry leading management team, a diversified customer and supplier base, predictable recurring revenue stream but would also consider acquiring ideas below the 25 million EBITDA.

I consider CLRS.PK a compelling opportunity with an excellent risk reward ratio or margin of safety.

From 8/5/2008 to 12/30/2008 Warren Kanders purchased 1,001,027 shares in the open market for an average price of $4.46 investing $4,467,208.

Additional shares were purchased before 8/05/08

CLARUS CORP --- Insider Trades

Insider Date Trans Type Form Shares Traded Price Shares Held
KANDERS WARREN B 12/30/2008 B Form 4 300,000 3.75 3,213,977
KANDERS WARREN B 11/26/2008 B Form 4 125,000 4.2 2,913,977
KANDERS WARREN B 11/21/2008 B Form 4 142,027 4.2 2,788,977
KANDERS WARREN B 8/11/2008 B Form 4 309,000 5.105 2,646,950
KANDERS WARREN B 8/5/2008 B Form 4 125,000 5.146 2,337,950
KANDERS WARREN B 11/15/2007 B Form 4 58,500 6.5 2,212,950
EHRLICH BURTT R 8/22/2007 B Form 4 25,000 7 88,000

Insider activity from Yahoo

I have a long position in CLRS.PK


Ra'uf said...

I am sorry to ask such a basic question, but what is NOL?

ShadowStock said...

Hi Ra’uf

NOL stands for net operating losses. When Kanders deploys the +86 million in cash the new combined company MAY have the opportunity to avoid the tax expense on 223 million of profits. The NOL on a per share basis is $13.22 and has value.

The reason for sharing this information was the recent 1st conference call where the company spoke with optimism on the ability to deploy the corporate assets during 2009. Also I believe there is not much down side with 4.95 net cash per share and the 223 million in NOL when compared to the recent $4.00 price.

You can listen to the conference call by clicking "investor calls"


Ra'uf said...

Thanks for your clarification. I love your site.